(Bloomberg) -- President Donald Trump’s top energy official said the oil industry is on its way back after suffering crippling losses from an unprecedented price collapse.
“We now have 23 states that are opening up their local economies, that represents roughly 40% of the gasoline demand in the United States,” Energy Secretary Dan Brouillette said in an interview with Bloomberg Television on Tuesday. “We’re starting to see oil prices stabilize.”
The oil market has staged a modest recovery since prices plunged into negative territory last month for the first time ever, amid signs that demand is making a gradual comeback and as producers cut output to erode a supply glut.
The Energy Information Administration on Tuesday announced modest downward revisions to its oil production estimates for this year and next, and revised up its forecasts for oil prices compared with April.
Brouillette shrugged off the risk that U.S. output could come back too quickly and threaten the market’s recovery. Pipeline giant Energy Transfer LP said on Monday that some drillers in the Permian are reopening wells that were shut in response to the pandemic-driven collapse.
“The third and fourth quarters in 2020 and certainly into 2021 are going to be very, very robust,” Brouillette said, with production coming back online as the economy takes off.
On Tuesday, oil futures in New York climbed to the highest level since early April, gaining 6.8%, after the U.S. government lowered its output forecast for the year.
Trump previously directed Brouillette and Treasury Secretary Steven Mnuchin to explore options to ensure capital keeps flowing to U.S. oil producers amid the downturn. Brouillette, though, said it was too early to say whether the oil industry still needed federal aid and that it varied on a case-by-case basis.
To contact the reporters on this story:
Stephen Cunningham in Washington at scunningha10@bloomberg.net;
David Westin in New York at dwestin@bloomberg.net
To contact the editors responsible for this story:
David Marino at dmarino4@bloomberg.net
Reg Gale, Joerg Richterich
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